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- Do you know how much your home is really worth?
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Do you know how much your home is really worth?
If you’re thinking of selling your home, you may be fantasizing about the profit you’ll reap from the sale or calculating exactly how much you’ll need to pay off your current mortgage and have enough left over for a down payment on the next house.
Before your fantasies run amok you need to realize that, while you can estimate the value of your home in a variety of ways, the true value is only what a buyer will pay for it. That said, there are several ways to get a strong idea of how much a buyer will pay for the property in current market conditions.
What Your Home Isn’t Worth
Many homeowners find it confusing that there are various numbers floating around that indicate their home value. Here are a few:
Comparative Market Analysis
A REALTOR® can do a comparative market analysis with recent market data to help you estimate your home value. When you sell your home, an appraisal will be required by the buyers’ lender, so keep in mind that your home has to appraise for the selling price or, depending on how your contract is written, you’ll have to renegotiate the sale or the buyers will need to come up with extra cash.
A CMA is both an art and a science. While it’s based on data, it also requires local market knowledge and intuition about which homes to compare and how to interpret the prices. Most realtors will look for recent sales of homes that are similar to yours, preferably within the past two or three months, up to about six months. In addition, a realtor can look at other homes currently on the market and homes that didn’t sell that were taken off the market to compare values.
The comparison of your home with others should include not only the size and the number of bedrooms and baths, but also the condition of your home, the neighborhood and the proximity to amenities. If you do not understand the comparisons a realtor is making, ask to see some of the homes currently on the market or look online at photos of the properties.
While it may be tempting to list your home with the realtor who tells you it can sell at the highest price, a smarter way to sell your home is to price it as accurately as possible from the beginning. Studies show that an overpriced home that lingers on the market will end up selling for less than the estimated correct price.